Significant Expansion of San Francisco Campaign and Ethics Laws (May 2018)

The San Francisco Board of Supervisors approved a package of significant changes to the City’s campaign and ethics laws earlier this week.  The package places new restrictions on campaign contributions from individuals and entities seeking government contracts and development agreements; imposes new reporting obligations on political committees; creates an entirely new reporting regime for charitable donations made at the request of City officials; and grants the Ethics Commission (“SFEC”) greater enforcement authority over state and local campaign and ethics laws.  The new laws will alter fundraising activities in the November elections (the new laws do not take effect until after the June election), and will require more diligence and compliance procedures by political committees, individuals and businesses active in San Francisco politics.

Additional Restrictions Placed on Contributions by Prospective City Contractors

     Although the original version of the law would have applied the ban on political contributions from individuals and entities pursuing City contracts to entities pursuing any type of land use permit, the final version only applies the ban to real estate entities seeking development agreements.  The law also extends the ban from 6 months to 12 months after approval of the contract or development agreement, and applies it to 10 percent, rather than 20 percent, owners.  I.e., the owners of large projects which need a development agreement as part of their approval – as well as their C-level officers and their 10 percent owners – will no longer be able to make contributions to candidates for Supervisor or Mayor, and until 12 months after the project is approved.

     The law also increases the penalties for violating the contractor ban to three times the amount of the contribution, and gives the SFEC the power to recommend that City Departments and Commissions “debar” violators from future City contracts.

Additional Reporting Related to “Behested Payments”

     Currently, elected officials who ask a person to make a donation to a charity or civic group must file a “Behested Payment” report for donations of $5,000 or more.  Evidently concerned that those who make these charitable and civic donations are attempting to curry favor with City officials – but aware that a total ban on such donations would not be enforceable – the new law sets up a completely new reporting regime for such “Behested Payments.”

     San Francisco will now be the only jurisdiction in the state which requires City Commissioners, as well as elected officials, to file Behested Payment reports.  It will also be the only jurisdiction which requires these reports for donations as small as $1,000, and which requires the reports to identify any “affiliation” between the City official and the nonprofit organization, as well as any of the nonprofits’ ads or website posts which feature the official.

     Even more notably, San Francisco is now the only local jurisdiction which requires the individuals or entities which donate to a nonprofit pursuant to a City official request to file their own, separate report  – and the only place where nonprofits which receive these donations have to file separate reports disclosing how the money was spent and whether the nonprofit lobbied the Commissioner or Supervisor.

Additional Reporting Requirements Placed on Political Committees

     *    Ballot measure committees and PACs which receive a contribution of $10,000 or more from a business entity will now have to list on their campaign reports at least one of the business’ principal officers and whether the business has received funds through a City contract or grant in the last 24 months.

     *    Anyone making a contribution of $5,000 or more to a ballot measure committee or PAC at the request of a City elected officer will now have to disclose that officer’s name to the PAC, and the PAC will now be required to list the name of the officer on its campaign report.

     *    San Francisco committees will now have to file an extra campaign report on the Friday before every election, covering the period ending on the Wednesday before the election.

     *    Candidate campaigns will now have to list on their campaign reports anyone who “bundles” contributions of $5,000 or more for their campaigns.

Miscellaneous Additional Restrictions on Political Activities

     *    City Commissioners will now be barred from fundraising for Supervisors (if they were appointed by the Board) or the Mayor (if they were appointed by the Mayor).

     *    City Commissioners and elected officials will now be barred from asking their staff members to volunteer for their campaigns, for another candidate, or for a ballot measure campaign.

     *    The new law adds even more onerous rules for the “paid for by” disclaimers on political ads, including listing the PAC’s top three contributors of $10,000 or more rather than their top two contributors of $20,000 or more, and requiring the disclaimers on “electioneering communications” to be 14 rather than 12-point font.